Stated documentation programs allow borrowers who have difficulty documenting their true income and/or assets with the option to literally state their income or assets to qualify for their refinance.
A stated loan program is a perfect program for self employeed indiciduals who have not taken out regular paychecks and have trouble verifying their income.
Stated refinance program refers to the lenders documentation requirements to obtain the loan. In a stated program the income is stated, or declared instead of verified.
Stated mortgage programs are not an opportunity for the borrower or the mortgage broker to lie about income. Falsifing a mortgage loan application is a crime and you could be punished if caught. Never let a loan officer talk you into stating a income higher then you actually earn.
Sometimes though the underwriter will use the 90th percentile too, just ask your AE what their u/w's use.
Because you are simply stating your income on your loan application and you are not documenting your income at all on a stated income loan there will generally be a slight rate bump or increase to your interest rate on this type of program. Whenever you use a stated refinance program this has a higher risk to a bank because they are not actually documenting or verifying that you make the amount of money that you are stating on your loan application and thus this is the reason that there is usually a small rate increase added to this loan type.
A lot of underwriters go to salary.com and add 30% to the 75th percentile and divide by 12mo to come up with a "ceiling" on how much the borr can state before the file is countered with a "lite doc" or "full doc" approval.
Many brokers have access to Stated Income, Stated Assets loans with no difference in interest rate from a Full Documentation loan. These loans are available to borrowers with excellent credit and perfect payment history.
Some Stated Income Programs require Verified Assets. This means that the lender wants to see that the borrower has some liquid assets such as checking, savings or investment accounts.
Some Stated Income and Verified Asset programs allow you to count the Cash-Out on a refinance towards these assets.
Some lenders will not have any bump to the rate on certain stated income loans such as purchases and rate and term refinances up to 95% of the value of the home. However you must have a FICO score over 700 and have a long and excellent payment history.